Part 7Derivative contracts

Chapter 6Special kinds of company

Insurance companies

636Modifications of Chapter 5

(1)

Chapter 5 (continuity of treatment on transfers within groups) has effect in relation to insurance companies with the following modifications.

(2)

Section 625(1)(a) (which sets out one of the conditions for that section to apply) has effect as if for “section 626(2)” there were substituted “section 626(2), (2A) or (2B)”.

(3)

Section 626 (transactions to which section 625 applies) has effect as if after subsection (2) there were inserted—

“(2A)

A transaction is within this subsection if it is a transfer between two companies of business consisting of the effecting or carrying out of contracts of long-term insurance which has effect under an insurance business transfer scheme.

(2B)

A transaction is within this subsection if it is a transfer between two companies which is a qualifying overseas transfer.

F1(2C)

In subsection (2B) “qualifying overseas transfer” means so much of a transfer of the whole or any part of the business of an overseas life insurance company carried on through a permanent establishment in the United Kingdom as takes place in accordance with an authorisation granted outside the United Kingdom for the purposes of F2Article 39 of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).”

(4)

Section 625 (group member replacing another as party to derivative contract) does not apply as a result of a transaction or series of transactions within section 626(2) or (3) in relation to a transfer of an asset, or of rights or duties under or an interest in an asset, ifF3, immediately before or after the transfer, the asset was held for the purposes of a company's long-term business (but, in the case of an overseas life insurance company, ignoring assets which are not UK assets (within the meaning of section 117 of FA 2012)).

(5)

Section 625 does not apply as a result of a transaction within section 626(2A) or (2B) in relation to a transfer of an asset, or of rights or duties under or an interest in an asset, if the asset—

(a)

was within one of F4the applicable categories immediately before the transfer, and

(b)

is not within that category immediately after it.

F5(5A)

For the purposes of subsection (5)(a) “the applicable categories” means—

(a)

in the case of a UK life insurance company, the long-term business categories or a category of assets which are not held for the purposes of its long-term business, and

(b)

in the case of an overseas life insurance company, the UK long-term business categories, a category of UK assets which are not held for the purposes of its long-term business or a category of assets which are held by it but which are not UK assets.

(6)

Subsection (7) applies for the purposes of subsection (5) if one of the companies is an overseas life insurance company.

(7)

An asset is taken to be within the same category both immediately before the transfer and immediately after it if the asset—

(a)

was within one category immediately before the transfer, and

(b)

is within the corresponding category immediately after it.

F6(8)

For the purposes of this section—

(a)

“the long-term business categories” has the same meaning as in section 116 of FA 2012, and “the UK long-term business categories” and “UK assets” have the same meanings as in section 117 of FA 2012, and

(b)

section 122 of FA 2012 applies as it applies for the purposes of Chapter 8 of Part 2 of that Act.